Making the Case – Using a Receiver to Sell Real Property to Satisfy a Judgment

IntroductionΒ The statutory remedy of selling real property under a writ of execution provides a strict but orderly process that a judgment creditor may follow toward satisfaction of the judgment. However, judgment creditors may consider the process to be too complex and the cost prohibitive in light of the nebulous results attendant to the statutory procedure.

This article discusses use of a court appointed receiver to sell Realtor Tucson property as an alternative to the statutory execution sale. Using a court appointed receiver to sell real property offers a number of distinct advantages over an execution sale:

 

  • There is a greater degree of certainty that the property will sell under an order appointing a receiver-often in the same amount of time (or less) as a creditor’s first run through an execution sale (i.e., about five months);
  • Once the receiver is appointed, he handles all of the procedures necessary to complete the sale with very little effort needed from the creditor; and
  • The receiver can sell the property on the open market, through a real estate agent, to realize the highest return possible.

 

Despite the obvious advantages, appointment of a receiver is considered a “drastic remedy” and many courts will not grant an order to appoint a receiver unless there are extenuating circumstances and “good cause”, such as:

 

  • A previous execution sale against the property was unsuccessful;
  • The net amount expected from an execution sale will not satisfy the judgment in full;
  • Non-debtor third parties own an interest in the subject property;
  • The property includes a resident business that is also subject to execution against an interest of the judgment debtor;
  • The judgment debtor stipulates to appointment of the receiver in order to get the greatest value for the property applied toward the judgment; or
  • A fraudulent transfer of the property has been made or threatened, or there are other circumstances indicating fraud or dissipation of the asset.

 

In the most general terms, the moving party should be prepared to show:

 

  • That the other less drastic remedies provided by statute are inadequate AND that appointment of the receiver will substantially improve the outcome; OR
  • That the receiver is necessary to preserve the interests of all concerned, particularly if outside third parties have an interest in the property or there are “badges of fraud” present.

 

The purpose of this article is to help you “make the case” for appointment of a receiver under your particular circumstances. The tips provided here are designed to help you establish the requisite “good cause” to convince the court that this otherwise “drastic remedy” is necessary and appropriate in your particular judgment enforcement case.

The Realities of Execution Sales California provides a distinct and orderly process to sell real property under a writ of execution. Code of Civil Procedure §§701.510, et. seq. This method has a number of important safeguards for the debtor built in. These include:

 

  • Personal service of notice on the debtor;
  • An opportunity for the debtor to respond;
  • Title report or equivalent is obtained and reviewed;
  • Fair Market Value and homestead exemptions are determined;
  • Debtor given minimum 120 days from notice to sale; and
  • Homestead Property must sell for at least 90% of determined Fair Market Value.

 

Due to the strictures of this process, there are a number of reasons why a judgment creditor might not obtain satisfaction in the end. Consider these common issues:

 

  • The execution method requires cash on sale or within 10 days and these days, buyers with cash are looking for a better deal than 10% under fair market value
  • Buyers are not able to walk through and inspect the property before buying resulting in a lower bid price, especially on questionable properties
  • A mistake is made in the process, where the process must begin again
  • The sale lacks the benefit of common open market sales like listings on the Multiple Listing Service, aggressive marketing by a licensed real estate agent, ability for buyers to obtain financing, inspections and repairs, etc.
  • The sheriff or levying officer has numerous responsibilities and cannot devote any significant amount of time toward insuring completion of the sale or other “special attention”

 

If you are in a situation where you have gone through an execution sale without success, appointment of a receiver may well provide some satisfaction in your case.

 

Leave a Reply

Your email address will not be published. Required fields are marked *